2015/10/241 Report on the Guardians Fund Select Committee on Security and Constitutional Development

2015/10/242 The Guardian’s Fund (GF) is a statutory trust established in terms of Chapter V of the Administration of Estates Act, 1965 (Act 66 of 1965). The purpose of the GF is to protect and manage monies of persons deemed to be legally incapable or lacking the capacity to manage their own affairs as well as undetermined, unknown or absent heirs and untraceable persons. The GF has representation in Six Masters Offices namely Pretoria, Cape Town, Pietermaritzburg, Grahamstown, Bloemfontein and Kimberley Some of the functions are inter alia to - process inheritance applications and make payments to persons entitled thereto - invest monies held with the PIC - Interest calculation in respect of money's received on behalf of beneficiaries Introduction and background

2015/10/243 The governance obligations of the Department demanded that a robust response be evolved to address the issues plaguing the Fund. The Department mobilized resources and expertise and instituted a Project to turn- around and implement various financial and accounting initiatives to redress the decline of the financial environment and ensure better accounting for the Fund. A multi skilled project team addressed: - Procedural challenges (staff doing things incorrectly); - Non-compliance with key legislation and prescripts; - Errors and accounting backlogs; - Addressing all processing backlogs; and - Facilitating the completion of a computer system roll-out. The Department has now appointed a permanent Chief Director for the Third Party Funds and a Director specifically for the Guardians Fund in that Chief Directorate The Financial Management Response

2015/10/244 Audited Outcomes The Guardians Fund audit report has been consistently Qualified or Disclaimed from 1993 through to 2006/7 Financial year. Since then …. 2009/10 Unqualified Audit report NAQ (No Audit Qualification) 2008/09 Unqualified Audit report NAQ (No Audit Qualification) 2007/08 Unqualified Audit report NAQ (No Audit Qualification) 2006/07 Qualified Audit report ( Uncertainty around opening balances )

2015/10/245 Accounting challenges facing the Guardian's Fund can be ascribed to the issues listed below: –Staff Capacity constraints –Skills Shortage –Inadequate/antiquated accounting systems –Evolving financial accounting standards (GAAP) –Continuous Growth in Fund Size Accounting Challenges

2015/10/246 Surpluses over the years 2006/07 – R65,1 million 2007/08 – R107,4 million 2008/09 – R48,2 million 2009/10 – R119,1 million These surpluses fluctuate as return on investment fluctuate. The beneficiaries are however shielded from the fluctuation

Growth in beneficiary receipts and payments * Data for 2010/11 as at the end of September 2010

Volumes and values of Receipts:

Volumes and values of payments : * Data for 2010/11 as at the end of September 2010

Transaction volumes and Receipts

Total Assets vs. Beneficiary Liabilities

Investments: Public Investment Corporation In terms of Section 87 of the Administration of estates Act, No.66 of 1965) beneficiary amounts received in the Guardians Funds should be invested with the PIC. All monies except for those required for immediate disbursements are invested with the PIC

2015/10/2413 GUARDIAN’S FUND ACHIEVEMENTS -Return on investment of 8.5%; -Growth of Fund 15% or R770million in the last year -Improved Controls and Turnaround times -MOVIT – online verification of fingerprints in collaboration with Dept of Home Affairs -Unqualified Audit reports -5 of the 6 Guardians Funds have complete verified beneficiary detail

2015/10/2414 Service Delivery The Fund is growing on average at 15% In terms of net-asset base The transactions doubled from due to the age of majority being reduced from 21 to 18 years In The Fund paid out R754m, which is money in the hands of vulnerable people enabling them to participate in the economy Services to the beneficiaries are rendered at no cost to them Interest rate is higher than most low risk investments The beneficiaries are cushioned from market fluctuations due to the conservative investment strategy that we adopted few years ago i.e we invest at 8.5 return and we pay at 7.5% to beneficiaries. The 1% difference between 8.5 and 7.5 goes to reserves till the end of the financial year where after paid over to the National Revenue Fund.

2015/10/2415 Highlights The increase in the number of people served daily Reduction of instances of Fraud: From 1 April 2010 to 31 January 2011 only 13 instances of fraud were discovered while we made more than payments (9 in Pmb and 4 Pta) ICMS and Guardians Fund System will be integrated to substantially improve Service Delivery Online verification of fingerprints (MOVIT) implemented in 3 offices The process of finding a suitable Accounting Solution is underway and a final decision on the matter is eminent